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TMI Blog2025 (3) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... rving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. Facts of the case may be summarized as that the assessee / appellant company e-filed its return of income on 30.09.2014 declaring loss of Rs. 1,17,026/-. Thereafter, the case was selected for scrutiny through CASS and assessment proceedings were initiated by issuance of notice u/s 143(2) of the Act, dated 18.09.2015 and notice u/s 142(1), dated 18.05.2016 and 31.05.2016 along with questionnaire. The assessee / appellant company was incorporated on 20.01.2010 with the main object of dealing in generation and distribution of electricity and during the year under consideration no business activities was carried out by the assessee company and assessee company received the share application money amounting to Rs. 2,56,44,000/- as detailed under: Sr. No. Name of the Shareholder Amount (in Rs. ) 1 M/s Pooja Equity Advisor Pvt. Ltd. 20,00,000/- 2 M/s Parnav Sport Academy Pvt. Ltd. 23,00,000/- 3 M/s Prathvi Coal Pvt. Ltd. 2,44,000/- 4 M/s South Asia Portfolios Pvt. Ltd. 51,00,000/- 5 M/s JSR Trading Pvt. Ltd. 40,00,000/- 6 M/s Mang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the creditworthiness of assessee and genuineness of the transaction including the source. 8. Per contra, the Ld. AR while relying upon the impugned order, submitted that in the course of assessment proceedings of necessary documents and details were submitted before the Ld. AO and response to the notices issued to the assessee / appellant, he produced information and documents as listed below to prove the identity, genuineness and creditworthiness of the parties from whom share application money were received. Sr. no. Name of the investor company Investment in shares Documents Filed Net worth P.B. Pg. No. 1 M/s Gamma Insturmentation Pvt. Ltd. AAACG43629 25,00,000 Copy of: a. Confirmation b. Bank statement c. Application form for shares d. ITR 3.09 crores 50-53 2 M/s Sorus Power Pvt. Ltd. AAPCS2574M 18,00,000 Copy of: a. Confirmation b. Bank statement c. Application form for shares d. ITR 2.74 crores 58-61 3 M/s Pummy Garments Pvt. Ltd. AAFCP5340J 7,00,000 Copy of: a. Confirmation b. Bank statement c. Application form for shares d. ITR 2.77 crores 55-57 4 M/s Pooja Equity Advisor Pvt. Ltd. AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f memorandum and articles of association * Copy of resolution authorizing to subscribe equity shares 157-178 4 M/s Pooja Equity Advisor Pvt. Ltd. AADCP4625J Rs. 20,00,000/- * Copy of the reply submitted in response to notice u/s 133(6) * Copy of statement of bank account * Copy of details of transaction made with AJ Energy Pvt. Ltd. * Copy of resolution authorizing to subscribe equity shares * Copy of acknowledgment of ITR * Copy of Audited Financial Statements * Copy of memorandum and articles of association 318-348 5 M/s Pranav Sport Academy Pvt. Ltd. AAFCP2723H Rs. 23,00,000/- * Copy of the reply submitted in response to notice u/s 133(6) * Copy of statement of bank account * Copy of resolution authorizing to subscribed equity shares * Copy of confirmation letter * Copy of certificate of incorporation * Copy of memorandum and articles of association 248-285 6 M/s Prathvi Coal Pvt. Ltd. AABCI4748P Rs. 2,44,000/- * Copy of the reply submitted in response to notice u/s 133(6) * Copy of details of transaction made with AJ Energy Pvt. Ltd. * Copy of statement of bank account * Copy of acknowledgment of ITR * Copy of Audited Financial St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of a private limited company may not be sufficient when surrounding and attending facts predicate cover up, and these facts indicate and reflect proper paper work or documentation by genuineness, creditworthiness, identity are deeper and obtrusive, and he further observed that companies no doubt are artificial or juristic person but they are soulless and are dependent upon the individuals behind them who run manage the said companies. The person behind these companies were not produced by the assessee. Identity, creditworthiness or genuineness of the transaction is not established by merely showing that the transaction was through banking channel or by account payee instrument. In this regard, the Ld. CIT(A) vide impugned order observed that the assessee / appellant company provided all the relevant document and found that assessee company discharged its onus and addition made by the Ld. AO on the basis of suspicion cannot be treated as accommodation entries and the same cannot be sustained without bringing adverse materials on records. The relevant para of the impugned order at page 17, reproduced as under: "The Assessing Officer has mentioned in the assessment order that app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s false. The investment has been confirmed by the investor companies before AO and such confirmations are on record." 13. The Ld. AR submitted that the Ld. AO nowhere raised any doubts in respect of desired documentary evidence produced by the assessee, during the assessment proceedings and it is settled position of law that once assessee has provided documentary evidence to prove the identity of the share application and creditworthiness of the share applicant and the genuineness of the transaction and the Ld. AO could not met any contrary findings then addition U/s 68 cannot be made by the AO. 14. The Ld. AR vehemently argued that in the case of Nova Promoters, which is relied upon by the Ld. DR, entry operators as given statement that they have issued cheques and in turn received cash but admittedly no such statement by any entry operator in this case, and also submitted that in the case of Nova Promoters the ratio of decision of lovely exports will be applicable where AO has no material in his possession to show that particular submitted by the assessee are false and cannot be acted upon, then no addition can be made on the hands of the company and remedy is to go after share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lutions. Income Tax Returns and Bank Statements were not genuine documents. The Assessing Officer did not make any verification in this regard either from the internal record of the Department or from the concerned banks. If he so wanted, he could have called for the Income Tax Returns of the share applicants to ascertain whether the investment made in the assessee company was reflected in their Balance Sheets or not. Nothing prevented the Assessing Officer from summoning the record of the banks on which cheques issued by the applicant companies were drawn. No such course was. however, adopted by him. 9. There was no legal obligation on the assessee to produce some Director or other representative of the applicant companies before the Assessing Officer. Therefore, failure of assessee to produce them could not, by itself, have justified the additions made by the Assessing Officer, when the assessee had furnished documents, on the basis of which, the Assessing Officer, if he so wanted, could have summoned them for verification. No attempt was made by the Assessing Officer to summon the Directors of the applicant companies. The addresses of these companies must be available on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered by the Hon'ble Supreme Court in Commissioner of Income Tax vs. Lovely Exports 301 ITR 218 (SC), held at the relevant extracts have been reproduced in the order of the AO as well as the CIT(A) which disclosed that the share applicants were entering into proper commercial transactions and were not per se forged, bogus or sham investors. In the case Lovely Exports (supra) as mentioned hereinabove, the Hon'ble Supreme Court held that if the share application money is received by the assessee company from alleged bogus shareholders whose name is given to the Ld. AO then the Department is free to reopen individual assessment in accordance with law. 19. After hearing both and bare perusal of the impugned order, the Ld. CIT(A) rightly observed that the assessee / appellant company furnished all necessary documents to prove the genuineness of the transaction and creditworthiness of the investor's companies and on the basis of the foregoing discussion, and following binding judicial precedents mentioned hereinbefore, we find material substance in the submissions advanced on behalf of the assessee / respondent. There is no any ground exists to interfere with the finding given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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